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How Tyco break-up may benefit bonds

Normally bondholders would be wringing their hands at the prospect of a conglomerate with almost $13 billion in debt splitting into three separate entities. But in the case of manufacturing giant Tyco, which unveiled just such a plan recently, bondholders have been uncharacteristically optimistic. Nadia Damouni finds out why

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When Edward Breen, Tyco's chairman and CEO, announced on January 13 that the firm intends to split the $40 billion conglomerate into three entities, investment-grade bondholders breathed a sigh of relief. Their reaction was not because the spin-off would be entirely positive for them - since unlocking value and allowing the stand-alone companies to grow independently of their parent typically favours shareholders - but because fears surrounding an outright sale or leveraged buyout had been

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